Lifetime Mortgage

EQUITY RELEASE WILL REDUCE THE VALUE OF YOUR ESTATE AND CAN AFFECT YOUR ELIGIBILITY FOR MEANS TESTED BENEFITS.

How does it work?

A lifetime mortgage is a form of equity release scheme whereby a loan is secured against your property, providing you with a tax-free cash lump sum or a regular income to spend as you wish.

Although there are Lifetime mortgages where you pay the interest (and possible capital) as it accrues, commonly Lifetime mortgages are arranged on a roll-up basis, meaning that borrowers will not be required to make payments during the term of the loan, instead the lender adds the interest that accrues to the original loan amount. ‘Roll-up plans’ can be very useful but borrowers must remember that the amount of the mortgage debt can increase quickly due to ‘compounding’ – i.e. you will be charged interest on the original loan and any interest that is added to the loan account.

Interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold which could be when you move into long term care, or when you and your partner die. Subject to your age you can typically release between 18-50% of the value of your home with a lifetime mortgage.

ADVANTAGES

Choose a cash lump sum or regular income, typically with no monthly repayments to meet

You still own your home so all growth in the value (if any, of course) belongs to you

Loans with 'No negative equity' guarantee are available

Some plans enable you to guarantee an inheritance for your family

Plans can be taken out as young as 55

DISADVANTAGES

Inheritance amount will be reduced

Interest rates may be higher than for normal mortgages due to the long-term nature of the loan.

The amount owed on the loan can mount up quickly as interest is compounded.

Early repayment charges may apply

Tax position and certain state benefits will be affected

You could raise a larger amount with a reversion plan, especially at a younger age

Please note: You can get interest only lifetime mortgages wherein you pay interest monthly, but lifetime mortgages are mainly offered as 'rolled up' interest. 'Rolled up' interest is paid off altogether in one final payment along with the total amount of your loan when your property is sold, as described above.

Lifetime Mortgage

EQUITY RELEASE WILL REDUCE THE VALUE OF YOUR ESTATE AND CAN AFFECT YOUR ELIGIBILITY FOR MEANS TESTED BENEFITS.

How does it work?

A lifetime mortgage is a form of equity release scheme whereby a loan is secured against your property, providing you with a tax-free cash lump sum or a regular income to spend as you wish.

Although there are Lifetime mortgages where you pay the interest (and possible capital) as it accrues, commonly Lifetime mortgages are arranged on a roll-up basis, meaning that borrowers will not be required to make payments during the term of the loan, instead the lender adds the interest that accrues to the original loan amount. ‘Roll-up plans’ can be very useful but borrowers must remember that the amount of the mortgage debt can increase quickly due to ‘compounding’ – i.e. you will be charged interest on the original loan and any interest that is added to the loan account.

Interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold which could be when you move into long term care, or when you and your partner die. Subject to your age you can typically release between 18-50% of the value of your home with a lifetime mortgage.

ADVANTAGES

Choose a cash lump sum or regular income, typically with no monthly repayments to meet

You still own your home so all growth in the value (if any, of course) belongs to you

Loans with 'No negative equity' guarantee are available

Some plans enable you to guarantee an inheritance for your family

Plans can be taken out as young as 55

DISADVANTAGES

Inheritance amount will be reduced

Interest rates may be higher than for normal mortgages due to the long-term nature of the loan.

The amount owed on the loan can mount up quickly as interest is compounded.

Early repayment charges may apply

Tax position and certain state benefits will be affected

You could raise a larger amount with a reversion plan, especially at a younger age

Please note: You can get interest only lifetime mortgages wherein you pay interest monthly, but lifetime mortgages are mainly offered as 'rolled up' interest. 'Rolled up' interest is paid off altogether in one final payment along with the total amount of your loan when your property is sold, as described above.

Request a Call Back

Matthew Burman

Positive Solutions is a trading style of Quilter Financial Planning Solutions Limited, which is authorised and regulated by the Financial Conduct Authority. Registered as a Limited Company in England and Wales No. 3276760. Registered Office: Riverside House, The Waterfront, Newcastle upon Tyne. NE15 8NY VAT registered No. 386 1301 59. The Financial Conduct Authority does not regulate advice on commercial and agricultural mortgages, buy to let mortgages, or advice on some tax matters.

The information and content within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.